Malaysia Keeps Palm Oil Export Tax Unchanged for a Seventh Month

By Ranjeetha Pakiam -
Aug 16, 2013

Malaysia left the tax on crude palm
oil exports unchanged for a seventh month in September as the
world’s second-largest producer seeks to boost shipments before
inventories expand and output accelerates.

Shipments will be taxed at 4.5 percent next month as the
reference price was set at 2,281.72 ringgit ($696) a metric ton,
within the minimum band for a levy to be applied, according to a
Customs Department statement. The tariff was zero in January and
February before being raised to 4.5 percent in March.

Palm oil futures tumbled to the lowest since October 2009
last month as global supplies outpaced demand. Malaysia said in
October last year it would cut the tax to between 4.5 percent
and 8.5 percent from about 23 percent to help trim stockpiles
and compete with Indonesia, the largest producer. Indonesia kept
its export tax on crude palm oil at 10.5 percent this month.

“The differential between Malaysian palm and Indonesian
palm is quite attractive for exports out of Malaysia,” said
Gnanasekar Thiagarajan, a director with Commtrendz Risk
Management Services Pvt. in Mumbai. “Exports have started
picking up and prices will be firm in the near term. Most of the
destinations have not covered enough oil thinking that prices
are going to fall, so they will all come to buy when prices go
up, because that’s the nature of physical buyers.”

Weekly Advance

Futures in Kuala Lumpur were headed for the biggest weekly
gain in 32 months today as soybeans rallied on concern that the
U.S. may harvest a smaller crop than forecast. The contract for
delivery in November was 1.4 percent higher at 2,331 ringgit a
ton by the midday break on the Malaysia Derivatives Exchange.
Palm competes with soybean oil in food and biofuels uses.

India, the world’s largest palm oil importer, may find it
more attractive to buy the oil from Malaysia instead of
Indonesia, Thiagarajan said. Purchases by India declined for the
first time in three months in July after a slump in the rupee to
a record low increased costs for refiners, according to the
Mumbai-based Solvent Extractors’ Association of India.

Shipments from Malaysia climbed 18 percent to 644,589 tons
in the first 15 days of August, surveyor Intertek said
yesterday. Exports rose 0.5 percent to 1.42 million tons in
July, while inventories climbed 1 percent to 1.66 million tons,
the Malaysian Palm Oil Board said Aug. 14. Stockpiles reached a
record 2.63 million tons in December.